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June 16, 2005

Boeing Says ‘Yes’ To In-Flight Cell Phones

by Sam Savage

LE BOURGET, France -- Boeing Co. unit Connexion expects to start selling cellular phone services to airline passengers as early as next year, its president said on Thursday, despite opposition from the flying public.

"We expect that once the regulatory issues and the social issues are ironed out we'll be introducing that (mobile phone) service as well," said Laurette Koellner, president of Connexion by Boeing, the unit which offers in-flight Web access. "We're projecting that to be some time next year."

"The technology is pretty well figured out," she told Reuters at the Paris Air Show. .

The U.S. Federal Aviation Administration is reviewing its ban on the use of phones and other wireless devices on planes.

However, U.S. passengers overwhelmingly oppose lifting the ban, according to an April poll by the National Consumers League and a flight attendants' union.

But Koellner said she expected some kind of compromise solution that would either mandate certain quiet periods on flights or create quiet zones, with the first being the most likely solution.

Koellner, who took the unit's helm in December after its former president, Scott Carson, was made Boeing's head of sales, said the cell phone service would remain smaller than its main business of providing in-flight broadband hook-ups.

While Connexion is by far the dominant player in providing in-flight broadband access, it would face more competition in the area of cellular service.

Privately-held AirCell, based on Colorado, is developing an in-flight cellular network, as is Geneva-based OnAir, whose investors include Boeing archrival Airbus.

Koellner confirmed that Connexion is likely to break even in 2008. She declined to give revenues or say what percentage of passengers on planes with the system are using it.

The broadband access service will be installed on 120 passenger jets by year-end, up from 64 now, Koellner said. There are some 12,000 commercial airliners in service worldwide, of which 8,000 would be suitable for the service, Boeing estimates.

Connexion has also started offering its service for use on cargo ships, a market it has said could be worth a billion dollars. It won a first order this week from U.S.-based Teekay Shipping.

Koellner said the maritime market would probably comprise close to one third of the company's business "at some point."